I understand eessentially this is a personal decision I ultimately need to make but I sure would appreciate your advice.
Here is my Story....
I'm a 50 year old widower (single), don't plan on this point of getting married again and raising another family so a small home is fine for me.
I purchased a brand new built 3bed 3bath, 1,300 SQ FT, 2 story traditional craftsman, detached townhouse 10 years ago (2007). It was a quick purchase to get out of renting at the time. It's been nice and is serving its purpose but not my dream home.
It's a stress-free, maintenance-free property - vinyl siding, smaller roof footprint being a narrow townhome (less expensive on the future re-roofing costs), $75 month HOA fee that covers all front landscaping and maintenance and built in 2007.
I only have about $160K left on my current mortgage. Making the minimum mortgage payments it's due to be paid off about the time I retire in 17 years and I'll be debt-free.
That all said here is the big decision ....
I'm longing to buy my dream home - A home with modern style architecture, vaulted ceilings, skylights and lots of big windows that let the outdoors in, natural textures like stone and wood.
I love the Joseph Eichler mid-century modern style homes or even the late seventies or early eighties contemporaries. Or perhaps have a small modern home built. I don't need much maybe 1200 to 1500 square feet.
I qualified for a a 30-year conventional and my max approved loan amount my monthly payments will probably be only about $100-$200 more per month than what I'm currently paying on my townhome. So it's affordable in that regard. I didn't qualify to hold two mortgages in order to keep the town house and rent it out. So that scenario is out of the question. Any deal is contingent on selling my town house first.
In doing so I'll have a sizable down payment on a new property and net about $10,000 in cash at close to put into my savings account.
The question I'm having trouble deciding is would I be making the right financial decision? I'd be taking on a whole new mortgage for 30 years at age 50 with no equity. Essentially starting over. Paying the minimum mortgage payments it won't meet my financial goals of being debt-free at retirement in 17 years.
Right now I feel like I'm on my way to being financially free with my low mortgage balance and built in equity. With a different home, that larger mortgage and no equity will feel like a monkey on my back. Positive is I'll be happier in the new home, barring any unforeseen circumstances of an older property.
What do you think? Keep the town home and continue on my financial plan with less maintenance concerns and just settle for what I have? or find my dream home, and take on a new, larger mortgage debt, and potentially more home maintenance?
Thanks in advance for your advice. I know it's all personal and individual but your advice would sure help.
Sun Oct 02, 2016 4:31 pm
oldguy Senior Member
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quote: I'd be taking on a whole new mortgage for 30 years at age 50 with no equity. Essentially starting over. Paying the minimum mortgage payments it won't meet my financial goals of being debt-free at retirement in 17 years.
Goals are personal - but many people never think about why they have a goal. Eg, why do you want to be debt-free? It sounds nice, a mortgage burning event, yada. But why?
When I was your age I had 4 rental houses, 4 mortgages. I fixated on prepaying loans, finally paid-off 3 houses. And then it occurred to me - my Return On Equity went DOWN, not up - and by a large amount. After some calculating and soul-searching, I refinanced all of then, max'd out new 30-yr loans. And I invested all of the money that was previously tied-up in house equity, into the SP500 Index. I did that multiple times - at age 75, when I sold the last house, it still had a 30-yr loan on it.
The Eichler homes are nice, you must be in either SoCal or SanFran? (And that would explain why you use "only" and $160k in the same sentence, lol). I would put the lowest DP on a new house - and I would negotiate for a <4%, 30 yr, Fixed Rate loan - and then put your money into something that paid more than 4%. That keeps your cash flow down to a minimum - and provides a cash reserve that is readily available to you.
Sun Oct 02, 2016 6:51 pm
Rayz New Member
Cash: $ 0.65
Joined: 30 Sep 2016
quote:Originally posted by oldguy Goals are personal - but many people never think about why they have a goal. Eg, why do you want to be debt-free? It sounds nice, a mortgage burning event, yada. But why?
Freedom to retire and not HAVE to work in my retirement years to pay debt.